53% of CEOs in Asia Pacific believe their current business models will not survive within the next decade, PwC
PwCs 26th Annual Global CEO Survey – Asia Pacific: Leading in The New Reality has revealed two striking data points that bring to life the challenge facing 1,634 CEOs in the region at The World Economic Forum in Davos, Switzerland.
- 69% of Asia Pacific CEOs believe global economic growth will decline over the next 12 months, compared to last year when 76% felt growth would improve.
- 53% of Asia Pacific CEOs believe their companies will not be economically viable in the next decade, if they continue on their current path (14% more than global CEOs).
As macroeconomic conditions deteriorate, uncertainty rises and inflation hits levels not seen in decades, Asia Pacific CEOs are facing the dual imperative. Leaders must manage short-term external risks to drive profitability in order to survive whilst simultaneously, transform to thrive in the longer term.
Raymund Chao, PwC Asia Pacific and China Chairman, commented: “At this time last year, Asia Pacific CEOs’ optimism hit a 10-year high. Just a year later, we’re seeing a stark reversal of this confidence. With the continuous disruptions, CEOs in the region are facing the new reality. To execute the dual imperative successfully, leaders need to redefine their priorities around value creation, build a differentiated culture of empowerment, and collaborate broader and deeper than ever before.”
Despite fading CEO confidence in the global economy, Asia Pacific CEOs are far less pessimistic about prospects of their own countries compared to their global counterparts. In particular, CEOs in larger Asia Pacific countries show the highest level of optimism in their domestic growth – China (64%), India (57%) and Indonesia (50%) (compared to global – 29%). China’s health and economic policy measures appear to promote its gradual recovery by the second half of 2023 and into 2024.
Inflation, macroeconomic volatility and geopolitical conflict top Asia Pacific CEOs’ concerns
While health and cyber risks were the top concerns a year ago, the impact of the economic downturn is top-of-mind for Asia Pacific CEOs this year, with inflation (41%) and macroeconomic volatility (30%) leading the risks weighing on CEOs in both the short term (i.e. the next 12 months) and medium term (i.e. over the next five years).
Geopolitical conflict (30%) also stands out as one of the top risks. The war in Ukraine and growing concern about geopolitical flashpoints in other parts of the world have caused Asia Pacific CEOs to rethink aspects of their business models. They are planning to:
- adjust their presence in the current market and/or expand to new markets (53%),
- adjust supply chains (49%),
- diversify their offering (48%).
This is in contrast to global CEOs who prioritise investment in cybersecurity and data privacy, suggesting that Asia Pacific CEOs focus more on near-term economic impacts – preserve operating profitability and immediate cash flow generation whilst deferring value creation and sustainability to the mid to long term.
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